Fiji’s annual inflation rate has dropped to -3.8 percent in September, a decrease from -3.5 percent recorded in August, according to the latest announcement from the Reserve Bank of Fiji (RBF). This substantial decline is largely attributed to a reduction in prices for essential goods such as food, transport, and cooking fuel. Despite some increases in costs associated with alcohol, tobacco, and dining out, these were outweighed by the overall reductions, helping to keep consumer prices stable.
In light of this favorable inflation trend, the RBF has decided to maintain the overnight policy rate at a low 0.25 percent, a strategic move aimed at fostering economic growth through accessible lending rates. Governor Ariff Ali emphasized that the bank is focused on ensuring price stability while maintaining robust foreign reserves, which currently stand at $3.9 billion, sufficient to cover more than six months’ worth of imports.
The economic activity in Fiji remains strong, with expectations of achieving growth for the fourth consecutive year. Visitor arrivals have seen a slight increase to 735,154, driven primarily by tourists from the United States, Pacific Islands, Europe, and the UK, despite a decline in visitors from Australia, New Zealand, and Asia. Meanwhile, the timber and electricity sectors have shown positive growth, although production of gold, sugar, and mineral water has decreased due to industry-specific challenges.
Domestic consumption continues to thrive, sustained by higher incomes and remittances. Key indicators such as VAT collections, vehicle registrations, and electricity demand indicate a healthy level of spending among consumers. Moreover, investment activity is on the rise, attributed to ongoing construction projects, declining material costs, and increased imports for building activities.
The RBF’s August Business Expectations Survey reflects an optimistic outlook from most firms, with a majority anticipating stable conditions over the next 6 to 12 months and expressing intentions to invest in machinery and infrastructure. Notably, private sector credit expanded by 9.6 percent in September, and liquidity within the banking sector remains stable at approximately $2.3 billion.
However, Governor Ali cautioned about global risks that could affect the economic landscape, including tensions between the US and China, new tariffs, and the looming cyclone season. The RBF remains vigilant and will continuously monitor developments, adjusting policy as needed to safeguard economic stability and growth.
This positive economic trajectory illustrates Fiji’s resilience, underscoring a balanced approach by the Reserve Bank to support growth while keeping inflation at bay. As the country navigates both domestic and global challenges, the current trends suggest that a stable and prosperous economic future is within reach.
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